International Capital Flows

The aim of this research project is to get at a precise quantification of the welfare effects of globalization by analyzing the interaction of two key elements – technology and financing – in the market for domestic and cross-border mergers and acquisitions (M&As). The M&A market is especially suitable in this regard: Both foreign and domestic firms compete for ownership of other firms in this market, leading to massive reallocation of real, technological and financial factors of production across and within the boundaries of firms and countries. In particular, this project seeks to combine rigorous theoretical models with rich new firm-level data to explore the dynamics of this reallocation, and hence understand the sources of welfare gains – real and technological versus financial – from globalization.